A subscription merchant account gives you a simple way to process recurring payments. It is a secure approach to receive subscription payments that boost your ongoing revenue streams without any extra effort. It helps businesses with a subscription model grow seamlessly without having to do more work to collect payments.
Subscription management has become a major area, driven by the rise of recurring payment models across SaaS, digital services, streaming services, and other online platforms. We’ll be showing you how to support your subscription-based business model to keep the revenue flowing.
What is a subscription merchant account?
It is an account type used to collect revenue from subscription-based products. It processes recurring charges for services and products automatically.
It supports whatever billing cycle you use. Some companies carry out their billing monthly, while others choose quarterly or annually. Of course, you might give your customers the option of paying for their subscription in any of these ways.
The integration with your subscription management tools or payment gateway is crucial. It is what allows your business to offer a smooth payment service to customers and increase customer satisfaction with your payment solutions.
The use of subscription payment processing means that you can accept recurring payments in various ways. The accepted payment methods for this business model include card payments, SEPA direct debits, and bank transfers. However, standard bank transfers are typically customer-initiated rather than automatically charged each billing cycle (unlike cards or SEPA Direct Debit). They can all be easily managed on your payment gateway.
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How subscription merchant accounts work
To understand how subscription payment processing benefits you, we need to look at the key stages.
Step 1. Customer enrols in your subscription plan
It is where they give you the details needed to start the subscription payment processing model. It generally means their name, address, and payment information.
Strong customer authentication (SCA) is used to avoid the risk of fraud and unauthorized payments at this stage.
Step 2. Payment details and credentials are stored securely
Once the customer enters their card or bank details in the payment gateway, they are stored securely. It allows the merchant to collect revenue according to the plan without any unnecessary fraud risks.
Tokenization is used to keep the details secure. It ensures that there is no risk of the payment information being compromised and can help reduce your PCI DSS scope (depending on how payments are implemented).
Step 3. Automated transaction triggering on the billing cycle
The payments are collected automatically each time billing is due. It is vital for a positive customer experience. The customer doesn’t need to do anything to start a new payment, but neither does the business. So, there is no risk of a subscription payment being overlooked due to human error.
Step 4. Funds are settled into the merchant account.
The subscription payment is paid directly into your merchant account. With a swift and seamless process, this ensures that the payments are available without manual follow-up, depending on the settlement times of your payment method and provider. In this way, the business has a slicker cash flow.
Step 5. The customer gets notified of any failed payments
Issues like expired cards and a lack of funds can affect future transactions. By automatically notifying the customer, you get better customer engagement and clear communication on your subscription payments.
Subscription merchant account vs standard merchant account
Feature | Subscription management merchant account | Traditional merchant account |
Recurring billing cycle | Included as standard | Limited availability |
Payments charged automatically | Yes, using multiple payment methods | Manual, depending on the payment gateway |
Tools to boost customer experience and customer retention | Yes, as standard | Not included |
Different billing cycle availability | Multiple options | Basic approach |
Most suitable for? | SaaS, memberships and other subscription business models | One-off retail purchases |
Key features of a subscription merchant account
The subscription business model includes the following key features.
Automated recurring billing. This allows a subscription management platform to run smoothly at all times.
Tokenization gives secure card details storage. Debit and credit card processing meet PCI compliance.
Supports SEPA direct debits in the EU. Payment options like this ensure that every customer gets to choose something suitable.
Retry logic for failed payments. Having failed payments is a hassle, but automatic retries boost customer satisfaction and help the payments flow.
Customer lifecycle management. The process is improved through excellent customer management to help increase retention levels.
API integrations & webhooks. These elements allow clear communication and seamless processing for the business.
Advanced fraud detection. Every subscription transaction is protected against fraud using the latest technology to ensure compliance and safety.
Lower payment failures vs manual billing. This vital aspect keeps the payments ticking along and stops missed subscription transactions from becoming a problem.
Multi-currency support. The currencies you need to accept may vary depending on the locations of your customers, so choose the currencies to meet your specific needs.
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Benefits for businesses using subscription merchant accounts
Every business that offers a subscription plan can benefit from these areas. Companies that value recurring payments and long-term customers will want to make sure that they don’t miss these advantages.
Predictable revenue with improved cash flow. It can support the growth of any business. Having an increasing group of subscribers is a solid base for future growth.
Fewer failed payments. The risk of digital wallets and credit cards throwing up failed payments is a huge worry. The fact that subscribers aren’t lost due to expired cards and other issues is a major advantage.
Automated invoicing and notifications. The automatic aspect makes the subscription business method simpler. Companies don’t need to worry about regularly chasing payments.
Lower operational overheads. It is a cost-effective way to process payments and help a business grow sustainably.
Higher customer retention. The ability to retain clients and lower the rate of cancellations is a key benefit for any business.
Scalable billing. It is a key point for growing SaaS products. The process ensures that you can scale your plan and services to meet future demands.
Secure payment data handling. All of the data and every transaction are completely secure.
Which businesses need a subscription merchant account?
The subscription process is ideal for the growth of businesses in numerous industries, such as the following.
SaaS platforms
A monthly or annual billing plan lets these companies handle their growth process easily.
Membership sites
Clubs, gyms, and other services are dealt with comfortably. Adding subscribers helps retain customers and reduce cancellations.
Digital & content subscriptions
The cost for the likes of courses, apps, and tools can all be added to a subscription plan. It helps people pay on time with a simple process.
Utility-style recurring billing
People need to pay regularly for fees on hosting, telecom, insurance, and other utilities. This process allows subscribers to pay effortlessly and on time.
Marketplace subscription fees
It is a sensible way to receive seller subscription models on marketplaces.
Payment methods supported by a subscription merchant account
Depending on the payment provider, a wide variety of payment methods are accepted. It allows subscribers to pay for their service plan in a way that suits them.
Card payments. Paying with a Visa or Mastercard credit card or debit card is extremely popular. The simplicity makes this one of the top options.
SEPA Direct Debit. These EU recurring payments are also offered by Genome to make the subscription business model easier to implement.
Pay by Bank. The use of Open Banking recurring flows is another straightforward approach that makes life easier for everyone involved.
Stored payment credentials. Tokenized account-to-account (A2A) payments boost the PCI DSS compliance and other safety measures by storing data that can’t be used by hackers.
How Genome supports subscription payments
Genome helps our customers offer subscription-based services in a variety of ways.
A merchant account is available, meaning that payments received can be used quickly and easily.
With Genome, merchants can also accept Pay by Bank payments via Open Banking and instant bank payments. At checkout, customers choose Pay by Bank and authenticate through their own bank using strong customer authentication (SCA). Once approved, funds are transferred directly from the customer’s bank account to the merchant, with fast confirmation and easier tracking for recurring renewals.
And if you want to offer multiple payment options, debit and credit card payment processing will be available soon, so subscriptions can be collected via both bank payments and cards in one setup.
Find out more about what an instant bank payment is and how it helps you operate your business.
Business accounts with dedicated IBANs allow cross-border partner and customer payments. SEPA transfers and SEPA Instant transfers give Europe-wide access and can help with an international expansion plan.
An API for recurring billing workflows is used to allow smooth integration. You can also be sure of our expertise in fraud prevention measures. Secure authentication access lets you stay in control of your account at all times.
Fast onboarding for EU businesses is ideal for letting you start accepting funds and fees right away. Get dedicated IBANs for businesses and accept payments from different countries. Order a corporate virtual card to pay your corporate expenses.
How to set up a subscription merchant account
You can start accepting subscription business speedily by following these steps.
Sign up for a Genome business account.
Complete the know your business (KYB) verification. This is where you provide the business documentation we need to meet regulatory requirements.
Once done, apply for a merchant account: complete the verification and provide the required documents.
Once your merchant account is approved, you can start accepting payments.
